Cave Projects Ltd v Peter Gilhooley, John Kelly, John Moroney, Rory O'Brien and Joseph O'Hara

• Jurisdiction: Ireland
• Court: Supreme Court
• Judge: Mr. Justice Gerard Hogan
• Judgment Date: 28 January 2025
• Neutral Citation: [2025] IESC 3
• Docket Number: No. 150/2023

Between

Cave Projects Ltd.

Plaintiff/Respondent

and

Peter Gilhooley, John Kelly, John Moroney, Rory O'Brien and Joseph O'Hara

Defendants/Appellants

[2025] IESC 3

Dunne J.

Charleton J.

Hogan J.

Murray J.

Collins J.

No. 150/2023

AN CHÚIRT UACHTARACH

THE SUPREME COURT

JUDGMENT of Mr. Justice Gerard Hogan delivered the 28 ^th day of January 2025

Introduction

1 . Commencing in 2015, the Oireachtas has introduced a series of changes designed to ensure that firms who engage in credit servicing activities are now required to be authorised by the Central Bank. The present appeal raises the question of whether these legislative changes can have any retrospective effect to debt enforcement proceedings which commenced well before these statutory changes took effect and, in any event, whether the defendant appellant is entitled to raise this point in this appeal given that it was not directly at issue in the original High Court hearing. These issues arise in the following way.

Background facts

2 . In September 2007, the Bank of Ireland (“the bank”) advanced a loan facility of some €12m to a partnership of some five persons, including the appellant, Mr. Kelly. The money was advanced as a commercial property loan in order to facilitate the development of certain lands in Clare, Limerick and Galway.

3 . The loan facility was called in by the bank in January 2011 and the present proceedings were duly issued in its name against the original five defendants. In October 2011 the National Asset Management Agency (“NAMA”) issued an acquisition notice in respect of the loans and security under s. 90 of the National Asset Management Agency Act 2009. In January 2013 a loan asset sale deed was subsequently executed by NAMA with the plaintiff company, Cave Projects Ltd. (“Cave Projects”) so that the latter company acquired the loans. It was confirmed in the course of the hearing that this is the sole loan of this kind which Cave Projects owns.

4 . Shortly afterwards three of the other four defendants settled the claims against them and they further agreed to assign their interests in the secured land if demanded. Cave Projects was then substituted as the plaintiff in the existing summary summons proceedings which had originally been brought by the bank. Cave Projects then applied for summary judgment against the second and fifth defendants. In January 2015 the High Court refused to enter summary judgment and the matter was adjourned for plenary hearing. As it happens, Mr. Kelly sought to have the proceedings subsequently struck out for want of prosecution. This application was ultimately rejected by the Court of Appeal in a decision delivered on 28 ^th October 2022: see Cave Projects Ltd. v. Gilhooley [2022] IECA 245.

5 . The plenary hearing was heard by the High Court in November 2022. During the course of that action Cave Projects reached an agreement with the other remaining defendants. This meant that the proceedings continued only as against the remaining defendant, Mr. Kelly. Mr. Kelly was legally represented at that hearing. In the event O'Regan J. found for Cave Projects and judgment was entered against him in the sum of €11.4m.: see Cave Projects Ltd. v. Gilhooley [2022] IEHC 718.

6 . Mr. Kelly duly appealed to the Court of Appeal where he represented himself. Shortly before that appeal was due to be heard, the Central Bank issued a public notice (“the Central Bank notice”) on 21 ^st September 2023, to the effect that it believed that Cave Projects was engaged in credit servicing services in the State although it held no authorisation from the Central Bank as a credit servicing firm. The notice further stated that it was a criminal offence to engage in credit servicing without the appropriate authorisation. It is important to state, of course, that the notice did not change the legal position, but simply recorded the opinion of the regulator.

7 . While the Court of Appeal admitted the Central Bank notice de bene esse, the Court nonetheless rejected the appeal in a ruling delivered on 3 ^rd October 2023: see Cave Projects Ltd. v. Gilhooley [2023] IECA 241. Dealing with this point Haughton J. said first (at para. 49) that it was not a pleaded defence and that it was not the subject of any evidence before that Court. Haughton J. then continued (at paras. 50–52):

“50. Cave Projects take these objections and further submit that it is ‘purely a regulatory matter which has no relevance to the claim in these proceedings.’

51. That may well be so, although I do not consider it necessary to make any determination on the issue. It would be surprising indeed if the effect of the legislation was Cave Projects were prohibited in law from opposing this appeal and seeking to hold the judgment granted to it in the High Court, because that would be a serious interference with its constitutional right of access to the courts. Further, it certainly cannot be said, on the evidence before the court that Cave Projects in defending this appeal in respect of the order for payment to it of €11,407,826.09 to which it is clearly contractually entitled, is engaging in the provision of financial services to members of the public.

52. That said I would content myself with saying that it is not an issue that was raised or argued in the High Court or the subject of evidence, and it was not addressed in the judgment, and it is therefore not an issue that should be considered on this appeal.”

8 . This Court subsequently granted leave to appeal on 24 ^th January 2024, pursuant to Article 34.5.3° of the Constitution. The grant of leave was confined to the single overall question of the credit servicing/Central Bank notice issue and whether this had implications for the appeal itself: see [2024] IESEC DET 8.

9 . As the argument before this Court has developed, it can be said that this general question can be broken down further as follows: First, is the appellant entitled to raise the Central Bank notice/credit servicing issue? Second, if so, is Cave Projects engaged in credit servicing without authorisation so far as this appeal is concerned? Third, if the answer to the first two questions is in the affirmative, what, if any, implications do this have for the present appeal?

10 . At the original hearing of the appeal in July 2024 the Court considered that it would be desirable that the Central Bank should be heard on the credit servicing issue. It invited the Bank to present written submissions which it duly did. Counsel for the Bank attended the resumed oral hearing in November 2024 and briefly addressed the Court.

The relevant legislative provisions

11 . Before proceeding further, it is next necessary to set out the relevant legislative provisions.

12 . Part V of the Central Bank Act 1997 (“the 1997 Act”) was amended by the Consumer Protection (Regulation of Credit Servicing Firms) Act 2015 (“the 2015 Act”). The 2015 Act brought credit servicing firms within the regulatory remit of the Central Bank and credit servicing is now a regulated activity. The 2015 Act has since been amended by the Consumer Protection (Regulation of Credit Servicing Firms) ( Amendment) Act 2018 (“the 2018 Act”) and by the Consumer Protection (Regulation of Retail Credit and Credit Servicing Firms) Act 2022 (“the 2022 Act)”. The 2022 Act took effect on 16 ^th May 2022.

13 . The 1997 Act (as amended) provides that a legal person who meets the definition of a “Credit Servicing Firm” is required to obtain authorisation from the Central Bank in order to engage in the activity of credit servicing. “Credit servicing” is defined by s. 28 of the 1997 Act (as amended) for the purpose of those enactments in relation to a credit agreement as:

“(i) holding the legal title to the rights of the creditor under the agreement,

(ii) managing or administering the agreement, including—notifying the relevant borrower of changes in interest rates or in payments due under the agreement or other matters of which the agreement requires the relevant borrower to be notified, taking anv necessarv steps (or the purposes of collecting or recovering payments due under the agreement from the relevant borrower, or managing or administering any of the following:

• (A) repayments under the agreement;

• (B) any charges imposed on the relevant borrower under the agreement;

• (C) any errors made in relation to the agreement;

• (D) any complaints made by the relevant borrower;

• (E) information or records relating to the relevant borrower in respect of the agreement;

• (F) the process by which a relevant borrower's financial difficulties are addressed;

• (G) any alternative arrangements for repayment or other restructuring;

• (H) assessment of the relevant borrower's financial circumstances and ability to repay under the agreement;

• (I) determination of the overall strategy for the management and administration of a portfolio of such agreements,

• (J) maintenance of control over key decisions relating to such a portfolio,

(iii) communicating with the relevant borrower in respect of any of the matters referred to in subparagraph (ii).” (emphasis added).

14 . A “credit agreement” is defined in s. 28 of the 1997 Act as “an agreement whereby a creditor grants, or promises to grant, credit to a relevant borrower.” A “credit servicing firm” is defined in the 1997 Act as:

• “(a) a person (other than the National Asset Management Agency or a NAMA group entity (within the meaning of National Asset Management Agencv Act 2009) who undertakes credit servicing other than on behalf of an owner of credit,

• (b) a regulated financial service provider taken to be authorised to carry on the business of a credit servicing firm by virtue of subsection (3),

• (c) a credit servicing firm taken to be authorised to carry on the business of a credit servicing firm by virtue of subsection (4), or

• (d) a credit servicing firm referred to in...